1. THE SECRETARY OF STATE FOR FOREIGN AFFAIRS said that the Cabinet would have seen the latest telegram from Sir William Seeds (Telegram No. 165 from Moscow). The French Government had been anxious that a reply should be sent to our Ambassador in Moscow on the previous evening, but he (the Foreign Secretary) had said that it was necessary to wait until today. He suggested that the present position of the negotiations should be considered at a Meeting of the Foreign Policy Committee which would be held immediately on the conclusion of the Cabinet Meeting.

Two main points emerged, from. Sir Willim Seeds' telegram. The first was that the Russians did not like our formula, in regard to "indirect aggression", which they thought did not cover enough ground, and were determined to adhere to their own formula. In our view, this formula would give the Soviet Government a wide right of intervention in the internal affairs of other countries, and we could not justify acceptance of it.

The second point concerned Article 6. The Soviet Government still adhered to their view that while the Articles of the Political Agreement would be initialled, they should not enter into force until a Military Agreement had been concluded. The French had been anxious to concede this point at once. The Foreign Secretary's view was that he would be prepared to make a concession on this point in exchange for the Soviet Government accepting our view on the definition of "indirect aggression" to be included in Article 1. He would also be prepared to agree to a provision for consultation in regard to cases which, in the view of the Soviet Government, constituted indirect aggression but which were not covered by our formula.

The Foreign Secretary said that if the Russians were not prepared to accept an arrangement on the lines proposed, then the only alternative to a complete breakdown of the negotiations would he the conclusion of a simple tripartite pact. If the negotiations should, after all, fail, the Foreign Secretary said that this would not cause him very great anxiety, since he felt that, whatever formal agreement was signed, the Soviet Government would probably take such action as best suited them if war broke out.

The Foreign Secretary added that he had had a long talk with Mr. Greenwood and Dr. Dalton, to whom he had explained the position. He found that they were entirely in accord with our attitude in regard to the definition of "indirect aggression". He was not, therefore, apprehensive of Parliamentary criticism if we were to break with the Soviet Government on this point.

Asked as to the prospects of reaching agreement on the basis of a simple tripartite pact, the Foreign Secretary said that he was rather disposed to think that the Soviet Government were not very keen on concluding an agreement of any kind.

In reply to questions, the Foreign Secretary said that he thought there was some evidence that Germany was trying to make matters as difficult for us as they could in our negotiations with the Soviet Union. It seemed that discussions of some kind were proceeding between the German Government and the Soviet Government. It was impossible to assess their real value, but it seemed likely that these discussions related to industrial matters.

THE PRIME MINISTER said that he could not bring himself to believe that a real alliance between Russia and Germany was possible .

The Cabinet —

(1) Took note of the Secretary of State for Foreign Affairs' statement;

(2) Agreed, that the lines of the reply to be sent to Sir William Seeds should be settled at a Meeting of the Foreign Policy Committee to be held immediately on the conclusion of the Cabinet Meeting.